Marketing Final

associated services (or augmented product)

The non-physical attributes of the product, including product warranties, financing, product support, and after-sale service.

brand associations

The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality.

brand awareness

Measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications

brand dilution

Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

brand equity

The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.

brand extension

The use of the same brand name for new products being introduced to the same or new markets.

brand licensing

A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characters in exchange for a negotiated fee.

brand loyalty

Occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buying from multiple suppliers within the same category.

brand personality

Refers to a set of human characteristics associated with a brand, which has symbolic or self-expressive meanings for consumers.

brands

The names, terms, designs, symbols, or any other features that identify one seller’s good or service as distinct from those of other sellers.

cobranding

The practice of marketing two or more brands together, on the same package or promotion.

consumer products

Products and services used by people for their personal use.

convenience goods/services

Products or services for which the consumer is not willing to spend any effort to evaluate prior to purchase.

core customer value

The basic problem-solving benefits that consumers are seeking.

family brand

The use of a combination of the company brand name and individual brand name to distinguish a firm’s products.

generic

A product sold without a brand name, typically in commodities markets.

individual brand

The use of individual brand names for each of a firm’s products.

manufacturer brands

Brands owned and managed by the manufacturer.

perceived value

The relationship between a product or service’s benefits and its cost.

private-label brands (store brands)

Brands developed and marketed by a retailer and available only from that retailer.

product category

An assortment of items that the customer sees as reasonable substitutes for one another.

product line depth

The number of products within a product line.

product lines

Groups of associated items, such as those that consumers use together or think of as part of a group of similar products.

product mix

The complete set of all products offered by a firm.

product mix breadth

The number of product lines, or variety, offered by the firm.

shopping goods/services

Products or services—such as apparel, fragrances, and appliances—for which consumers will spend time comparing alternatives.

specialty goods/services

Products or services toward which customers show a strong preference and for which they will expend considerable effort to search for the best suppliers.

stock keeping units (SKUs)

Individual items within each product category; the smallest unit available for inventory control.

unsought products/services

Products/services consumers do not search out or do not know about.

communication gap

Refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.

customer service

Specifically refers to human or mechanical activities firms undertake to help satisfy their customers’ needs and wants.

delivery gap

The difference between the firm’s service standards and the actual service it provides to customers.

empowerment

In the context of service delivery, means allowing employees to make decisions about how service is provided to customers.

inconsistent

A characteristic of a service: its quality may vary because it is provided by humans.

inseparable

A characteristic of a service: it is produced and consumed at the same time—that is, service and consumption are inseparable.

intangible

A characteristic of a service; it cannot be touched, tasted, or seen like a pure product can.

inventory

A characteristic of a service: it is perishable and cannot be stored in inventory for future use.

knowledge gap

Reflects the difference between customers’ expectations and the firm’s perception of those expectations.

service

Any intangible offering that cannot be physically possessed.

service gap

Results when a service fails to meet the expectations that customers have about how it should be delivered.

service quality

Customers’ perceptions of how well a service meets or exceeds their expectations. Service Quality = Expections - Perception of Service Received

standards gap

Pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets.

voice-of-customer (VOC) program

An ongoing marketing research system that collects customer insights and intelligence to influence and drive business decisions.

zone of tolerance

The area between customers’ expectations regarding their desired service and the minimum level of acceptable service—that is, the difference between what the customer really wants and what they will accept before going elsewhere.

building blocks of service quality

reliability, responsiveness, assurance, empathy, tangibles

methods to reduce delivery gaps

empower employees, provide support & incentives, use technology

advertising allowance

Tactic of offering a price reduction to channel members if they agree to feature the manufacturer’s product in their advertising and promotional efforts.

bait and switch

A deceptive practice of luring customers into the store with a very low advertised price on an item (the bait), only to aggressively pressure them into purchasing a higher-priced item (the switch) by disparaging the low-priced item, comparing it unfavourably with the higher-priced model, or professing an inadequate supply of the lower-priced item.

break-even point

The point at which the number of units sold generates just enough revenue to equal the total costs; at this point, profits are zero.

Buy Now Pay Later (BNPL)

A payment installment option that lets consumers spread the cost of purchases over weeks or months.

cash discount

Tactic of offering a reduction in the invoice cost if the buyer pays the invoice prior to the end of the discount period.

competitive parity

A firm’s strategy of setting prices that are similar to those of major competitors.

competitor-based pricing method

An approach that attempts to reflect how the firm wants consumers to interpret its products relative to the competitors’ offerings.

competitor orientation

A company objective based on the premise that the firm should measure itself primarily against its competition.

complementary products

Products whose demand curves are positively related, such that they rise or fall together; a percentage increase in demand for one results in a percentage increase in demand for the other.

contribution per unit

Equals the price less the variable cost per unit; variable used to determine the break-even point in units.

cost-based pricing method

Determines the final price to charge by starting with the cost, without recognizing the role that consumers or competitors’ prices play in the marketplace.

cost of ownership method

A value-based method for setting prices that determines the total cost of owning the product over its useful life.

coupon

Provides a stated discount to consumers on the final selling price of a specific item; the retailer handles the discount.

cross-price elasticity

The percentage change in demand for Product A that occurs in response to a percentage change in price of Product B.

cumulative quantity discount

Pricing tactic that offers a discount based on the amount purchased over a specified period and usually involves several transactions.

customer orientation

Pricing orientation that explicitly invokes the concept of customer value and setting prices to match consumer expectations.

demand curve

Shows how many units of a product or service consumers will demand during a specific period at different prices.

dynamic pricing

Refers to the process of charging different prices for goods or services based on the type of customer; time of the day, week, or even season; and level of demand.

elastic

Refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changes in the quantity demanded.

everyday low pricing (EDLP)

A strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer.

experience curve effect

Refers to the drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in the price.

fixed costs

Those costs that remain essentially at the same level, regardless of any changes in the volume of production.

geographic pricing

The setting of different prices depending on a geographical division of the delivery areas.

grey market

Employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.

high/low pricing

A pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

horizontal price fixing

Occurs when competitors that produce and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers.

improvement value

Represents an estimate of how much more (or less) consumers are willing to pay for a product relative to other comparable products.

income effect

Refers to the change in the quantity of a product demanded by consumers because of a change in their income.

inelastic

Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded.

leader pricing

Consumer pricing tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store’s cost.

listing allowances

Fees paid to retailers simply to get new products into stores or to gain more or better shelf space for their products.

loss leader pricing

Loss leader pricing takes the tactic of leader pricing one step further by lowering the price below the store’s cost.

manufacturer’s suggested retail price (MSRP)

Manufacturers encourage retailers to sell their merchandise at a specific price.

markdowns

Reductions retailers take on the initial selling price of the product or service.

market penetration pricing

A pricing strategy of setting the initial price low for the introduction of the new product or service, with the objective of building sales, market share, and profits quickly.

maximizing profits strategy

A mathematical model that captures all the factors required to explain and predict sales and profits, which should be able to identify the price at which its profits are maximized.

monopolistic competition

Occurs when many firms sell closely related but not homogeneous products; these products may be viewed as substitutes but are not perfect substitutes.

monopoly

Occurs when only one firm provides the product or service in a particular industry.

noncumulative quantity discount

Pricing tactic that offers a discount based on only the amount purchased in a single order.

oligopoly

Occurs when only a few firms dominate a market.

predatory pricing

A firm’s practice of setting a very low price for one or more of its products with the intent of driving its competition out of business; illegal under the Competition Act.

prestige products or services

Those that consumers purchase for status rather than functionality.

price bundling

Consumer pricing tactic of selling more than one product for a single, lower price than the items would cost sold separately; can be used to sell slow-moving items, to encourage customers to stock up so they won’t purchase competing brands, to encourage trial of a new product, or to provide an incentive to purchase a less desirable product or service to obtain a more desirable one in the same bundle.

price discrimination

The practice of selling the same product to different resellers (wholesalers, distributors, or retailers) or to the ultimate consumer at different prices; some, but not all, forms of price discrimination are illegal.

price elasticity of demand

Measures how changes in a price affect the quantity of the product demanded; specifically, the ratio of the percentage change in quantity demanded to the percentage change in price.

price fixing

The practice of colluding with other firms to control prices.

price lining

Consumer market pricing tactic of establishing a price floor and a price ceiling for an entire line of similar products and then setting a few other price points in between to represent distinct differences in quality.

price skimming

A strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay to obtain it; after the high-price market segment becomes saturated and sales begin to slow down, the firm generally lowers the price to capture (or skim) the next most price-sensitive segment.

price war

Occurs when two or more firms compete primarily by lowering their prices.

pricing tactics

Short-term methods, in contrast to long-term pricing strategies, used to focus on company objectives, customers, costs, competition, or channel members; can be responses to competitive threats (e.g., lowering price temporarily to meet a competitor’s price reduction) or broadly accepted methods of calculating a final price for the customer that is short-term in nature.

profit orientation

A company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing.

pure competition

Occurs when different companies sell commodity products that consumers perceive as substitutable; price usually is set according to the laws of supply and demand.

quantity discount

Pricing tactic of offering a reduced price according to the amount purchased; the more the buyer purchases, the higher the discount and, of course, the greater the value.

rebate

A consumer discount in which a portion of the purchase price is returned to the buyer in cash; the manufacturer, not the retailer, issues the refund.